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By Caitríona Palmer, IFC Communications

Alexander Sutedja spent his first three years amid the congested and crumbling streets of Cengkareng, a low-income neighborhood in west Jakarta crisscrossed by polluted canals. He played indoors to avoid the city’s air pollution, mosquitos, and bumper-to-bumper traffic. Dim light and stifling tropical heat demanded round-the-clock electric lighting and air-conditioning, causing the family’s utility bills to sky-rocket.

Just a few years later—Alexander is now in elementary school—the Sutedja family’s life looks very different. They have moved to a brand-new two-bedroom townhouse in Citra Maja Raya, an affordable and sustainable housing development on the outskirts of Jakarta. Its high ceilings, natural light and ventilation, water-efficient fixtures, and external shading, are attractive and comfortable. Even more important, though, it makes a better future possible: the new home allows Alexander’s mother, Emilia, to save money for his education instead of spending it on electricity.

“With my in-laws, I used to spend 800,000 rupiah [$55] on electricity for a month,” Emilia Sutedja says. “Now we spend 200,000 rupiah [$14] for the three of us. It’s a huge difference.”

The Sutedjas are far from alone. With 90 million Indonesians expected to join the middle class by 2030, Jakarta is experiencing an epic construction boom. Climate change is exacerbating this sprawling city’s growing pains—sea levels are rising, rendering parts of the city unlivable. City officials must grapple with the challenge of housing residents while also minimizing environmental impacts. They’ve prioritized green-building efforts like the Citra Maja Raya as part of an overall commitment to reducing building-related carbon emissions and water and energy consumption by 30 percent by 2030.

“We want Jakarta to be known as a city of excellence for green buildings,” says Oswar Mungkasa, Jakarta’s Deputy Governor for Spatial Planning and Environment, “and it will take both the public and private sectors to make this happen, as well as local communities and citizens.”

How Green Buildings Can Combat Climate Change

Green buildings are becoming central to the global effort to tackle climate change. A new IFC report, Climate Investment Opportunities in Cities, estimates that green buildings account for more than 80 percent of the of $29.4 trillion in investment opportunities that will open up in emerging-market cities such as Jakarta by 2030. In Jakarta alone, there’s an estimated $16 billion market for green buildings—not only in new construction but also in retrofitting older buildings.

The city government aims to build at least 1,000 low-cost residential towers by 2020 to house those who have been relocated from shantytowns in the low-lying, flood-prone riverbank areas. Jakarta, known as the fastest-sinking city in the world, has long faced serious floods, including a deluge in 2014 that displaced more than 60,000 people.

With IFC’s help, Jakarta has developed a mandatory green-building code to reduce energy consumption from residential and commercial buildings by setting energy and water-efficiency requirements for building design. IFC also joined forces with a local partner, the Green Building Council Indonesia, to encourage more sustainable construction in the Indonesian real estate market.

Many Indonesian builders, owners, and financiers now use a free online app designed by IFC—called EDGE, for Excellence in Design for Greater Efficiencies—to quickly calculate the return on investment from energy and water savings. EDGE is now available in 144 countries.

In the last two years, about 40 large projects in Indonesia have either been EDGE-certified or are undergoing the process. Recognizing the impact of clear and strong building standards in their communities, local governments are providing incentives to developers through lower taxes, or additional floor space to enable faster market uptake.

The building’s energy consumption is 40 percent lower than that of other buildings, underscoring how green-building investment is not only essential for sustainability but also makes smart business sense.

“Green building is attractive to private investment because it is about responsible investment,” says Alex Buechi, a partner with Asia Green Real Estate. “If you have buildings that are energy-efficient, your cash flow will be greater.”

Since moving to the Citra Maja Raya development in January, the Sutedja family has traded west Jakarta’s smoggy streets for the gentle morning mists of Banten, located about 60 kilometers from Cengkareng. Their new townhouse, painted a brilliant aqua blue, is surrounded by schools, markets, and recreation and medical facilities. It is within easy walking distance of a railway station that quickly connects commuters to downtown Jakarta.

Inside the airy, bright townhouse with high ceilings and an open floorplan, Emilia Sutedja has placed whimsical decal patterns of orchids and butterflies across the living room walls. A bright curtain divides the kitchen area. A bookcase displays family mementos and photographs of a beaming Alexander—who now spends as much time as he likes outdoors, helping his mother tend to the ferns planted outside their front door.

“It is cool when it rains, and the morning air is really fresh,” Sutedja says of her new home. “Alexander is really happy, because he could only ride his bike inside before. Now, I feel comfortable letting him play in the street. It’s a good area to raise him in.”

Good environmental, social, and corporate governance standards are fundamental to the success of private sector investments. This story is part of a series about IFC’s work in supporting sustainable practices that provide new opportunities for people in developing countries.